Critical Elements, Vanadium and the Coming Green Revolution in Electricity Storage and Retrieval

Things like climate change, eco-sustainability, reduction of carbon footprints and even the value of smart grids have unfortunately not been part of the U.S. presidential election discussion. Given the importance of being good stewards of the earth’s resources—and the significance of not having to spend billions on new generating capacity based on fossil fuels because of ability to fully exploit the capabilities of renewable sources and store and then release their capacity when needed as a means to confront exploding electricity demand globally and the need to be green—this is unfortunate.

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However, out of sight is certainly not out of mind. In fact, as a result of a recent interview I had with Ron MacDonald, Chairman and CEO of Critical Elements Corporation and Executive Chairman of American Vanadium Corporation, I came away convinced we are at a major tipping point in the development of battery technology that is based on the use of highly pure forms of the rare minerals lithium and vanadium. These are poised to be game changers.

I usually don’t provide longish bios but this case deserves and exception since MacDonald knows from whence he speaks. A former member of the Canadian Parliament, he has been a corporate executive in the lumber industry, a natural resource consultancy, and a member to the OECD Committee which developed international guidelines concerning the use of conflict minerals. He also participated on the 'Electronic Industry Citizenship Coalition' committee developing guidelines for their global tantalum smelter verification program and has also been a contributor to the EU Commission 'Framework 7' policy paper on ‘Scarcity of Strategic Minerals.’

Rare earth minerals are key to our future

Our discussion of the role of rare earth minerals, particularly their role in revolutionizing battery technology started with a couple of interesting observations. MacDonald noted that, “We are at the beginning of a new industrial revolution based on the way we produce and use power.” He elaborated by saying for this revolution to occur, “Three things have been requisite: increased production of renewable energy, breakthroughs in battery management systems, and massive storage for load shedding.” The latter referring to the ability to generate capacity inexpensively (wind for example tends to be best at night), store it and then release it at peak times thereby off-setting the need to “build for peak.” According to MacDonald, we have a perfect storm of convergence on all three fronts.

As he further explained where rare earth minerals fits into this is on the battery side because without solving the storage problem the rest can’t be optimized. In storage, the goal is to produce commercially viable batteries capable of mass storage and it is well know that the two big rechargeable battery types are:

Lithium ion

Vanadium flow

It is thus no accident that MacDonald, who is deeply concerned not only about eco-sustainability but also about the need for North America to not be reliant on the kindness of others, to be so enmeshed in the extraction of pure forms of lithium and vanadium (which is used to strengthen steel and is a less pure form is a by-product of smelting) in the U.S. and Canada. Indeed, a very high priority is to enable North American companies to not cede market dominance on renewables and batteries to China, and to make independence in rare earth minerals a cornerstone of job creation for what promises to be a critical financial growth engine going forward on a variety of fronts.

This interest is exemplified by Critical Element’s Rose Tantalum-Lithium project. Currently in the development stage in Quebec and scheduled to go into production in 2014, the project will enable Critical Elements to become the largest producing of tantalum in North America as well as one of the largest for a very high-grade form of lithium. The company also has a 100 percent ownership in Rocky Mountain rare earth and niobium properties in British Columbia.

The chart below shows the uses of tantalum and lithium by industry. As can be seen, the use in batteries is a huge chunk.

On the vanadium side of things, American Vanadium is currently developing its 100 percent controlled Gibellini Project in Nevada along with several adjacent vanadium properties while evaluating strategic vanadium market related opportunities. As the company notes, “Gibellini's world-class NI 43-101 compliant vanadium resource, together with the project's significantly low cost (open pit, heap leach), represents the opportunity for American Vanadium to become North America's only primary producer of vanadium.” The goal in both instances is to be the dominant North American supplier of “ethical” rare earth minerals. And, just to emphasize the purer the mineral there can be exponential increases in performance when it is used in commercial products like batteries.

Facts that matter

The context for all of this is fascinating. Not only does China control the supply of 97 percent of the world’s rare earth resources, but they are aggressively looking to leverage this into leadership on all aspects of Green technology by doing in batteries what they have already conquered in the solar panel and wind turbine areas.

Next on the agenda in China is renewable energy integration to secure the country’s leadership in renewable. For example, China has a goal of securing 11.4 percent of its energy from non-fossil fuel sources by the end of 2015, up from 8 percent today. This is going to take a concerted effort that China is committed to on the battery front.

Vandium flow based batteries or ones that combine lithium and vanadium are key on this front along with batteries that combine the best of the lithium-vanadium properties. Without going into the science here, an observation from MacDonald is important to acknowledge. “It is hard to change people’s behavior.” However, as he explained, “ In the case of battery technology for electric vehicles (EVs), one of the most important factors in the public transitioning from petroleum based vehicles to green tech EVs is power. One of the leading contenders in this area is the powerful lithium-vanadium phosphate battery. When compared to the batteries in such EVs as the Chevrolet Volt or the Nissan LEAF, these next generation lithium-vanadium batteries go farther between charges and can recharge up to 80% in 15 minutes. Thus, you would have an electric vehicle that requires little behavioral change in the way the vast majority of people interact with their vehicles.”

From the use in batteries to the deployment of micro-grids using this type of storage to actually enable any user of renewable energy to contribute their excess capacity back to the grid—allowing electric utilities to buy power inexpensively and not have to build new large generators to be able to accommodate demand during peak usage hours—MacDonald is right to be enthusiastic about the prospects of rechargeable batteries that use pure forms of lithium and vanadium.

Based on overcoming the problem of lengthy and costly recharging that is currently holding back EV demand, he is also correct about how economics can compel behavior change at speeds that are likely to be unprecedented. What this can mean in terms of decreasing carbon footprints is in fact revolutionary on several fronts.

As MacDonald cautions, the future is heading toward us rapidly. He exhorted that, “As with capturing any emerging market, time is of the essence. Other nations are already actively making great efforts to establish themselves as leaders in these lithium and vanadium-reliant markets.” He noted for example that:

Subaru chose a lithium-vanadium battery for its prototype G4e EV, significantly increasing the car's range to 120 miles while reducing recharge times to only 15 minutes for an 80 percent quick charge or 8 hours for a full charge.

In Japan, a prototype of GS Yuasa Corporation's (GSY's) lithium-vanadium phosphate battery showed lower production costs while a 20 percent output gain compared to a lithium iron phosphate battery. GSY expects the new battery to be used in hybrid electric vehicles through its joint ventures with Mitsubishi and Honda (News - Alert), as well as through Toyota, one of its principle shareholders.

BYD China's vertically integrated auto manufacturer and the largest rechargeable battery maker in China also has interest in vanadium chemistries. Not only is BYD actively doing commercial work on lithium-vanadium batteries, but it is also focused on primary resource acquisition.

Reality is that understanding the value rare earth mineral independence, and educating the market about that value as it ripples through the entire value-chain, deserves attention. This is not just a case of potentially doing well by doing good, i.e., being green, it is economic manifest destiny in a battle that will be waged intensely around the world. Lithium is certainly a critical part of our future and vanadium is a mineral that needs to be added to our vocabularies. Critical Elements and American Vanadium are companies to keep a watchful eye on. Maybe post-election in the U.S. why all of this is so important will become more visible.